Economic Damage Calculation
We provide expert economic damage calculations and have testified in multiple state and federal courtrooms.
At the Knowles Group, our litigation support services can help you ascertain if the plaintiff or defendant has suffered economic damages as the result of the incident.
We have over 30 years of experience and understand how important it is to thoroughly and accurately assess the earnings potential of an individual. We retrieve from a wide range of accepted data sources and supplement that with other expert opinions and assumptions to paint an accurate pre and post-incident picture of the individual.
While our processes to determine this vary from case to case, we have a general outline that we use for calculating economic damages:
How are Economic Damages Calculated?
A records review will give us an idea of what the plaintiff’s employment and earnings capacity looks like today, what their future mitigating or alternative employment looks like, and what is the most reasonable employment opportunity. The answers to these questions and more will start to become apparent as we begin to review all records relevant to our economic analysis.
Earnings history can include various public and private records but not limited to:
- Earnings History
- Federal/State Tax Returns
- W2 Statements
- Social Security Administration
- State Unemployment
- Payroll Records
Profit and Loss Calculation
For P&L calculations, we look at the past Schedule C, or 1120S returns to project future income. Based on these available records, we can determine how an owner or company performed up until the incident date as well as during the past loss period. Any actual earnings must offset projected pre-incident income. We will provide a present value in today’s dollars on any loss of future cash flows of the individual.
The elements that we take into consideration are:
- Lost income – Income lost as a direct result of the event or incident.
- Other lost earnings – Effects of the damaging incident on pensions, royalties, dividends, or interest.
- Fringe benefits – Health insurance and retirement benefits.
- Misc. expenses – Medical, dental, or rehabilitation expenses. Cost of medical equipment or hiring household services providers such as a maid, gardener, or caretaker.
We’ll also examine the plaintiff’s answers to defendant’s requests, the depositions from the plaintiff, and personnel records as we try to piece together a pre-incident picture of the individual. While damage calculations can stem from several components, our experience allows us to produce a realistic economic value of the individual or business, both before and after the incident.
The records review process can take us several days to several weeks, depending on the amount of information that we have to go through. As we move forward with our review, we try to get an innate understanding of what the overall compensation picture looks like on an annual basis. We’ll also review personnel records to determine what fringe benefits look like.
From the records review, we can develop intelligent insights into the earnings capacity of the individual as we try to determine the economic damages they sustained. This is paramount to past and future loss calculations as we try to ascertain how much the person was making on an annual basis.
For example, with a 63-year-old male, will most likely have years of earnings history with a mature career arc.
But what if the plaintiff is an 8-year-old girl?
In this case, a records review won’t help us determine her potential earnings capacity. Instead, we’ll have to look at statistical and objective government survey data to get an idea. The U.S. Census survey and other sources can also provide earnings data that’s segmented by education.
We can also look to the parents for potential earnings for the child, adolescent, or young adult. There is no stronger correlating factor for the child’s future education and earnings capacity than the mother and father.
Do you need help calculating economic damages for your case?
Economic Expert Witness
In addition to objective data, records, historical averages, and other government data, we can also lean on other sources of information, such as vocational experts. Through various data points and expert opinions, we can present a reasonable case in which a person can do x, y, and z in the future, whether through re-education or retraining.
Eric Knowles has been providing expert economic witness testimony for well over ten years. He carries on the successful tradition of his father, David Knowles, PhD., who started the business in 1979.
Expert Economic Consulting
An expert economic witness can help paint an accurate picture of the financial state of the plaintiff before and after the incident. They will also help project past and future income and earning potential.
At The Knowles Group, we’re one of the top economic consulting firms in the U.S. and have testified in multiple state and federal courtrooms on behalf of both plaintiff and defense.
If you are looking for a financial or economic consulting firm to help calculate economic damages, give us a call at (206) 860-9477 or contact us via our website to learn more about the services we provide.